Iran war ‘largest disruption to crude supplies in history of global oil market’, says IEA
The Iran war has triggered an even bigger oil shock than the Arab oil embargo of the 1970s, the International Energy Agency (IEA) said.
The Paris-based agency said the conflict in the Middle East had caused the “largest disruption to crude supplies in the history of the global oil market”.
The amount of oil carried by tankers through the Strait of Hormuz has plunged from around 20 million barrels per day (mb/d) to “a trickle”, it said.
By contrast, around four mb/d were removed from global markets by the Arab oil embargo during the Yom Kippur war of 1973.
Not only is the hit to global supply bigger but production has also suffered a deeper blow. With “limited capacity” to bypass the Strait of Hormuz, Gulf countries have been forced to cut production by at least 10mb/d as storage sites have filled up, the IEA said. By contrast, production was reduced by about five mb/d in 1973.
Fatih Birol, the agency’s executive director, said: “Global energy markets are going through an extremely critical period due to developments in the Middle East.
“In particular, the closure of the Strait of Hormuz has caused serious disruptions in global oil and natural gas markets.”
He was speaking after IEA member states, including Britain, agreed on Wednesday to release 400 million barrels of oil from global strategic reserves. It marks the biggest ever release from the emergency stockpiles.
Mr Birol said the announcement had already made a “strong impact”. However, oil surged above $100 a barrel on Thursday after Iran’s new supreme leader vowed to keep the Strait of Hormuz closed to expand the theatre of conflict.
Two oil tankers were struck overnight in the Gulf in a suspected Iranian attack.
Tehran also launched a new wave of attacks against Gulf energy targets on Thursday.
Bahrain told residents to stay inside and close wind